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Nw Iowa | Not offering a whole lot of carry around here right now for corn in the winter of 08 compared to fall delivery of 07. Not enough to justify running it through a bin anyway. But that hasn't been the norm of the last few years though. I have storage for about 50% of my normal corn acerage. There has been years where it paid to bin the corn unpriced but alot of years I always end up with a better price for my corn that was sold pre harvest because i knew i didnt have bin room. But we are now in a different era of corn marketing with a DEMAND market.......or are we????? I still have this first gut feeling that all my new crop sales so far from 3.05 to 3.55 will be alot more than the prices that will be offered at harvest and better than the prices that will be offered a year from now. But thats my opinion basically.. My plan...I'm planning on selling 50% of a normal years production in cash sales, one thing to consider this year is that if you don't have storage for all your crop and you are forced to deliver a protion of your crop to the elevator this fall, there could be a definate delivery issue. If certain grain handlers aren't willing to put huge piles on the ground they might only take the corn that was pre sold to them which they are forced to take once they are full. It's happened before around here, (nw iowa). With the huge corn acreage being planted and considering the possibility of a good growing season there will be alot of corn forced to go to town. I'm also buying puts on the bushels that are planning on being put into my own farm storage. I will be 50% sold cash and 50% hedged with puts by the end of may and maybe my the end of april. Am I bearish? not really...just a young farmer that has never had this opportunity for profit in my career at 3.00 to 3.50 corn. I actually never thought this could be possible farming...this type of profit potential. I started farming in 1997 and i've never had a "healer" as the older farmers sometimes put it. With the volatility that is possible in this corn market i'm even considering buying call options on the 50% of cash sales I have. Now in a normal year of 2.00 - 2.70 cbot corn prices this would not be a recomended move by alot of marketing advisors. But this isn't our "daddy's" corn market. I honestly believe there is a $1.50 either way in this corn yet. Up or down from our levels now....I think it's worth it to spend .20 a bushel on puts for unpriced grain and also .20 for calls for all cash sold grain. I have been buying my puts for around .19 -.20 and will look to price my calls for the same maybe a little more. It's worth it to me to give that up to assure 3.00 for my crop with the option of hitting the illusive "home run" if this thing is truely a demand market that we are not capable of understanding yet. If anyone has any comments or suggestions on my plan I would be more than happy to hear them and hear of better ways to go about this. The numbers are very gut wrenching when you do a cash flow projection with selling your entire "average" crop at $3.25 vs selling half your crop at $3.25 and the other half at $2.25. There are alot of nervous farmers around here and I am one of them. | |
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07 Corn - Pricing Strategies and Storage
